In re Whole Foods Market, Inc.

163 F. Supp. 3d 385, 2016 U.S. Dist. LEXIS 18173, 2016 WL 631532
CourtDistrict Court, W.D. Texas
DecidedFebruary 12, 2016
DocketCase No. A-14-MC-2588-SS; [MDL. NO. 2588]
StatusPublished
Cited by3 cases

This text of 163 F. Supp. 3d 385 (In re Whole Foods Market, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Whole Foods Market, Inc., 163 F. Supp. 3d 385, 2016 U.S. Dist. LEXIS 18173, 2016 WL 631532 (W.D. Tex. 2016).

Opinion

[386]*386.ORDER

SAM SPARKS, UNITED STATES DISTRICT JUDGE

BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Plaintiffs’ Second Amended Consolidated Complaint (SACC) [#29], Defendant Whole Foods Market, Inc.’s Motion to Dismiss [#31];1 Defendants’ Motion to Dismiss [#32]; Plaintiffs’ Response [#41] thereto; and Defendants’ Reply [#46] in support. Having reviewed the pleadings, the briefing of the parties, the relevant law, and the case file as a whole, the Court now enters the following opinion and orders.

Background

This Multidistrict Litigation (MDL) involves eleven putative class action lawsuits against various “Whole Foods Market corporate entities2 and Skotidakis, Inc. (collectively, Defendants) based on an alleged misrepresentation of the amount of sugar in store-brand “Whole Foods 365 Everyday Value Plain Greek Yogurt (Yogurt). Plaintiffs are eighteen individuals who sue in their individual capacities and on behalf of a putative national consumer class and ten putative state subclasses comprised of consumers in Arizona, California, Florida, Illinois, Massachusetts, Missouri, New Jersey, New York, Pennsylvania, and Texas. Plaintiffs bring claims for violations of various state consumer protection and unfair competition statutes as well as claims for breach of warranty, unjust enrichment, negligent misrepresentation, and for other equitable remedies. Defendants now move to dismiss all claims against them with prejudice pursuant to Rule 12(b)(6). The motion is ripe for consideration.

1. Factual Allegations

The Whole Foods entities own and operate Whole Foods Market grocery stores, in which they sell a line of Whole Foods branded products marketed as a healthier alternative to other brands. Plaintiffs allege WFM Private Label, L.P., contracted [387]*387with a third-party manufacturer, Defendant Skotidakis, Inc., to produce the Yogurt for sale as a “store-brand” product to be sold at Whole Foods Market grocery stores across the country. The Yogurt was sold in 0% milkfat and 2% milkfat versions.

According to the nutrition facts label on the back of the product, the Yogurt contains 2 grams of sugar per one cup serving. Plaintiffs claim this statement was false. According to six tests conducted by Consumer Reports magazine,3 the Yogurt actually contained 11.4 grams of sugar per serving — nearly six times the stated amount. Plaintiffs rely solely on the testing conducted by Consumer Reports and do not allege they have conducted any independent laboratory testing of the Yogurt to corroborate Consumer Reports’ conclusions. Further, Plaintiffs do not allege which of the two versions of the Yogurt Consumer Reports tested.

The claimed amount of sugar was much lower than that of competitor’s brands, which generally ranged between five and ten grams of sugár per serving. Plaintiffs allege Defendants were aware the nutritional information on the Yogurt was false, but marketed and sold the product anyway in order to obtain a competitive advantage in the market. Plaintiffs further allege Defendants sold the Yogurt at a higher price than they would have had they labeled the sugar content accurately. Consequently, Plaintiffs claim they were harmed by the alleged misrepresentation because they chose to purchase the Yogurt at least in part based on its low sugar content, and that they paid more for the Yogurt than they would have had the label been truthful. Plaintiffs also allege they relied on Defendants’ representation in purchasing the Yogurt and that they would not have purchased the Yogurt if they had known it actually contained more than 2 grams of sugar per serving.

II. Procedural History

On December 12, 2014, the Judicial Panel for Multidistrict Litigation (JPML) centralized four of the eleven member cases in this Court pursuant to 28 U.S.C. § 1407 for purposes of coordinated pretrial proceedings. See Transfer Order [# 1], The remaining seven member cases were filed or received by this Court on or before April 7, 2015. See April 6, 2015 Transfer Order [#4]. After the Court denied remand to state court in two member cases, Plaintiffs collectively filed the SACC, which is the operative pleading for purposes of the Defendants’ motion.

Plaintiffs bring claims against Defendants for violations of various state consumer protection and unfair competition statutes4 as well as claims for breach of [388]*388express and implied warranty, unjust enrichment, negligent misrepresentation, and for declaratory and injunctive relief. Plaintiffs seek to represent a national class of all consumers who purchased the Yogurt on or after August 1, 2010. Plaintiffs also seek to represent a number of state subclasses that include all consumers who purchased the Yogurt in Arizona, California, Florida, Illinois, Massachusetts, Missouri, New Jersey, New York, Pennsylvania, and Texas on or after certain dates ranging from August 6, 2008 to October 10, 2012, depending on the subclass.

Defendants now ask the Court to dismiss the entirety of the SACC with prejudice on the grounds Plaintiffs’ claims are preempted by federal law, fail to state a plausible theory of causation, reliance, or injury, and fail to plead their fraud claims with the particularity required by Rule 9(b). With regard to the equitable claims, Defendants argue Plaintiffs lack standing to seek injunctive relief and their request for declaratory relief should be denied because the issues will be decided in the context of other claims. Finally, Defendants raise additional independent reasons Plaintiffs are not entitled to relief on their warranty, unjust enrichment, and state consumer protection claims.

Analysis

I. Applicable Law
A. Law Applicable in Multidistrict Litigation

Each of the eleven member cases have been transferred to this forum by the JPML pursuant to 28 U.S.C. § 1407. Sitting as an MDL transferee court, the Court must apply the law of its own circuit when analyzing questions of federal law. See, e.g., Menowitz v. Brown, 991 F.2d 36, 40 (2d Cir.1993) (citing In re Korean Air Lines Disaster, 829 F.2d 1171, 1175 (D.C.Cir.1987) (other citations omitted)). For example, because pleading standards are matters of federal law, the Court must look to and apply the law of the Fifth Circuit for purposes of Federal Rules of Civil Procedure 12(b).

There is no dispute that each of Plaintiffs’ various claims for relief arise under state law, see Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and as to matters of state law, the Court must apply the law of the trans-feror forum. See Hildebrandt v. Indianapolis Life Ins. Co., No. 3:08-cv-1815-B, 2009 WL 804123, at *2 (N.D.Tex. Mar.

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Bluebook (online)
163 F. Supp. 3d 385, 2016 U.S. Dist. LEXIS 18173, 2016 WL 631532, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-whole-foods-market-inc-txwd-2016.